McLachlan v Australian Stock Exchange Ltd No. Scgrg-98-1507 Judgment No. S284

McLACHLAN v AUSTRALIAN STOCK EXCHANGE LTD
[1999] SASC 284

Full Court: Olsson, Mullighan & Nyland JJ

OLSSON J:

Background

This is an appeal against an order of a judge of this court dismissing an application by the appellant for an injunction restraining the respondent (“ASX”) from maintaining or otherwise prosecuting a notice of disciplinary charges, dated 12 January 1998, served by it on him. The appellant was a member of the ASX at the relevant time. The notice of charges alleged prohibited conduct as a member, under the business rules governing his membership.
The application was based upon the fact that, on 13 October 1998, the status of the ASX was changed from that of a company limited by guarantee to a public company limited by shares. At that time it adopted a new Constitution (the “Constitution”) in substitution for its former Articles of Association (the “Articles”) in manner contemplated by Chapter 7, Part 7.1A of the Corporations Law. New Business Rules (“NBR”) were made in place of its former rules.
The appellant argued that, on 13 October 1998, when the ASX changed its status and adopted the Constitution, not only were the Articles repealed, but so also were the rules made pursuant to those Articles. So it was, the appellant submitted, that he ceased to be a “member” of the ASX in accordance with the provisions of the Articles. His status with the respondent was thereafter regulated by the Constitution and the NBR.
In the course of reasons published by him the learned the trial judge directed attention to the fact that the NBR attracted statutory recognition under the provisions of the Corporations Law. By virtue of the provisions of s 772A the NBR had effect as a contract under seal between it and each member, under which each of them agreed to observe and perform the provisions of the NBR as in force for the time being, so far as applicable.
Section 9 (aa) of the Corporations Law defined the word "member ", inter alia, as a person who was recognised under the business rules of the respondent as a suitably qualified affiliate of the ASX and who was involved in the carrying on of a business of dealing in securities (whether as an employee, director or in any other capacity).
It is common ground that, immediately prior to the change of status of the ASX, the appellant was, in fact, a member of it and thus bound contractually by its Articles and the so-called old Business Rules (the “OBR”) then in force.
The NBR contained transitional provisions in relation to the change of status. Inter alia, those rules provided that a person who was a natural person and a member of the ASX immediately prior to the relevant “Transition Time” was deemed to be recognised as an affiliate by the ASX at the Transition Time. The transition date was, of course, 13 October 1998.
In the course of his reasons for decision the learned trial judge summarised the foregoing situation in these terms:-
“On 13 October 1998, the defendant changed its type. Immediately before its change of type the plaintiff was a member of the defendant and bound contractually by its Articles and the Rules made under the Articles of Association. After the defendant changed its type the plaintiff remained a member of the defendant and is bound by the constitution of the defendant. The [plaintiff] became an affiliate of the defendant and as such those rules had the effect of a contract under seal between the defendant and the plaintiff.”

The issues at first instance

It is not disputed that, on 2 November 1998, the appellant wrote to the chairman of the ASX as follows:-
“I have decided to permanently retire from the stockbroking industry and hereby surrender my status as an Affiliate, which I hope, will be accepted forthwith.”
It was the claim of the appellant that, by virtue of that letter, he ceased to be a shareholder, member or an affiliate of the ASX and, in those circumstances, there was no longer any contractual relationship between the ASX and himself. There was, accordingly, no continuing jurisdictional basis for the National Adjudicatory Tribunal (“NAT”), constituted by the Articles, to hear and determine pending disciplinary charges.
It is to be noted that, by letter dated 20 November 1998, the ASX replied to the appellant's letter in these terms:-
“ASX has considered your letter of surrender and resolved, pursuant to ASX Business Rule 5A.1.6, not to accept the surrender of your recognition as an Affiliate of ASX at this time and to defer further consideration of the issue until outstanding disciplinary proceedings before the National Adjudicatory Tribunal have been finally determined or otherwise disposed of, including any appeal rights.”
The learned trial judge, on the evidence before him, accepted that the appellant had retired from his employment in the stockbroking industry and no longer devoted any part of his time to the active business of any stockbroking firm. Although he had retained his directorship of Thompson Brindal Pty Ltd, that company had not traded for a considerable period of time and he had no active role in relation to it.
There was also evidence before the learned trial judge to the effect that, subsequently to 13 October 1998, the appellant disposed of all of the shares in the ASX which had been allotted to him. The precise date upon which this disposal occurred does not readily appear.
In those circumstances it was claimed by the appellant that the ASX had unreasonably refused to accept the surrender by him of his status as an affiliate. He argued that, a refusal to accept that surrender, gave rise to what he described as an untenable situation wherein, whilst the ASX will not accept his surrender, nevertheless it essentially desires, itself, to put in motion steps to cancel his status as an affiliate.
Furthermore, the appellant contended that it was impermissible for the ASX to refuse the surrender of the affiliate status solely to enable disciplinary proceedings to be pursued by it against him and not for any reason that goes to a question of the basis of his surrender. Put another way, it was submitted that, by refusing to accept the appellant's surrender of his status, the ASX was purporting to require the appellant to continue in a contractual relationship in which he had no desire to continue, even though he had a contractual right to elect to remove himself, by the surrender of his affiliate status.
At first instance the ASX contended that it was entitled to refuse to accept the appellant's surrender of its recognition of him as an affiliate, because of the charges which were pending against him.
The ASX submitted that the charges related to substantial losses incurred by the clients of Retireinvest and are of a serious nature. It was pointed out that, if the charges are established before the NAT, the appellant will become liable to the imposition of substantial penalties. Such penalties potentially embrace a monetary fine not exceeding $100,000 and a requirement to pay the total commission or gross profit, or any part thereof arising from the relevant transactions, to the ASX or its board. Furthermore, the appellant may be expelled from the ASX and his name may be published in a public register.
It was the assertion of the ASX that it had an obligation to enforce compliance with its rules and to discipline affiliates in respect of conduct which was prohibited, either by the Articles and the OBR or by its new Constitution and the NBR.
The learned trial judge essentially upheld the lastmentioned contentions of the ASX.
Having noted that the ASX occupies an important place in the commercial fabric of Australian society and that ensuring compliance with the highest standards of behaviour by its affiliates was in the public interest, the learned trial judge concluded that the ASX had not acted unreasonably in refusing to accept the surrender by the appellant of his status as an affiliate.
It was his opinion that an affiliate may not oust the jurisdiction of the ASX to consider charges in relation to prohibited conduct simply by surrendering his status. He reasoned that, if it was otherwise, it would mean that an affiliate could breach any aspect of the conduct prescribed by the ASX and escape any consequences of that conduct by simply surrendering status. That would mean that the penalties provided for would be to no avail.
The learned trial judge found that there was no doubt that the ASX refused to accept the surrender of the appellant’s affiliate status in order to enable the NAT to hear and determine the charges against him.
He held that it is implicit in the relationship between affiliates and the ASX that, once charges are laid for the consideration of the NAT, then the ASX may refuse to allow an affiliate to surrender status, pending the hearing and determination of those charges. He derived support for that conclusion by reference to the reasoning in R v General Medical Council [1930] 1 KB 562 at 569 (“General Medical Council”) and R v Wilson; ex parte Robinson [1982] Qd R 642 at 646 - 647 (“Robinson”).
He summarised his conclusions in the above regard in this fashion:-
“In my opinion, the plaintiff did agree with the defendant that he would submit to the jurisdiction of the defendant as provided for by the Articles and Rules of the defendant, and thereafter by the constitution and business rules of the defendant, in relation to any charge brought by the defendant for breaches of its Articles or Rules or constitution or business rules. In my opinion the plaintiff agreed both before and after 13 October 1998 that he would, subject to any right of appeal, abide by any finding of the National Adjudicatory Tribunal in an inquiry into his conduct. He further agreed that he would, if prohibited conduct was established, submit to any penalty lawfully imposed. Further, he agreed that he would not, prior to 13 October 1998, resign as a member and after 13 October 1998 surrender his status as an affiliate whilst there were charges which had not been heard and determined by the National Adjudicatory Tribunal. Implicit in that agreement is the further agreement that, if he did purport to surrender his status as an affiliate of the defendant, the defendant was entitled to refuse to accept that surrender whilst charges relating to prohibited conduct remained un-resolved.
In those circumstances it is not unreasonable for the defendant to refuse to allow the plaintiff to surrender his status as an affiliate pending the hearing and determination of those charges.”
A second issue raised on behalf of the appellant, both before the learned trial judge and on this appeal, was that, quite apart from the foregoing situation, the notice of charges against him lapsed by reason of the change of status of the ASX.
The learned trial judge rejected the submission of the appellant that the NAT had no jurisdiction to continue to hear the charges laid under the repealed Articles and the OBR. He pointed out that the transitional provisions in the Constitution, as set out in Article 25, continued the NAT in existence after 13 October 1998. He considered that, properly construed, they and the transitional provisions of the NBR permitted the charges which had been laid to continue to have the same effect after the change of status of the ASX. It was his opinion that the effect of the various transitional provisions was such that the acts done under the Articles and OBR had effect, from 13 October 1998, as if those acts had been done under or for the purposes of corresponding provisions of the NBR. As he said:-
“It follows that the transitional provisions of the business rules made under the constitution after 13 October 1998 have the effect of providing that any disciplinary steps taken under Articles 51 or 52 have effect as if they have been taken under the corresponding provisions of the business rules made under the [new] Constitution. The adoption of the constitution and the business rules on 13 October 1998 does not affect the continuity or status, operation or effect of those disciplinary steps taken against the plaintiff prior to 13 October 1998.”
Upon the foregoing bases of reasoning the learned trial judge dismissed the appellant’s claim.

The appeal

The appellant now appeals against that order of dismissal upon the footing that the reasoning of the learned trial judge is said to be erroneous. In essence, he seeks to re-agitate the same contentions as were advanced at first instance. It therefore becomes necessary to examine them afresh.
In considering the submissions made on this appeal it is essential to examine the situations both pre and post 13 October 1998 in somewhat greater detail than the precis outline which I have given above.
Prior to 13 October 1998 the ASX was a company limited by guarantee. The conduct of members of the ASX was regulated by the provisions of the Articles, read together with the OBR.
Clause 70 of the Articles expressly empowered the board of the ASX to make rules for the order and good government of its members and its affairs, including rules with respect to the conduct of business. The OBR were, in fact, the rules so made and in force as at 13 October 1998.
The Articles contained a definition of the phrase “Prohibited Conduct”. This included conduct amounting to impropriety affecting professional character and which was indicative of a failure either to understand, or to practice, the precepts of honesty or fair dealing in relation to clients or the public. It also included conduct which was, or could reasonably be considered as likely to be, prejudicial to the interests of the ASX or its members, as well as unsatisfactory professional conduct which involved a substantial or consistent failure to reach reasonable standards of competence and diligence.
Clauses 51 to 56A inclusive of the Articles set out a full and comprehensive code dealing with the manner in which violations of the Articles or the OBR ought to be dealt with. Those provisions contemplated service of written notice of particulars of a charge on the member and the subsequent hearing and determination of that charge by the NAT.
The charges preferred against the appellant, as recited above, were pending before the NAT, but had not been heard and determined by it, as of 13 October 1998.
On 18 October 1996 the ASX passed the requisite resolution, referred to in the Corporations Law, to change its status from that of a company limited by guarantee to a public company limited by shares. The procedures that were adopted to give effect to that resolution were those envisaged by s 766A, s 766B, and s 766C of the Corporations Law. By virtue of the operation of s 766C, the effective date of change of status was 13 October 1998.
Section 766D of the Corporations Law specifically provided that the change of status of the ASX did not:-
(1)... create a new legal entity; or
(2)... affect its existing property rights or obligations (except as provided by the section); or
(3)... render defective any legal proceedings.

It went on to stipulate that:-

“On the change of type, the following things happen:
(a) .. the liability of each member and past member as a guarantor on the winding up of the Exchange is extinguished;
(b) the members cease to be members of the Exchange;
(c).... shares are taken to be issued equally among all persons who satisfy the criteria set out in articles 83 and 84 of the Exchange that were added by the 18 October 1996 special resolutions dealing with the change of type, and each of those persons becomes a member of the Exchange and is taken to have consented to be a member of the Exchange;
(d) the proposed amendments of the Constitution, business rules and listing rules of the Exchange take effect.”

It is at once to be observed that, as at 13 October 1998, the existing membership of the appellant in the ASX automatically terminated by virtue of the above statutory provisions. However, by reason of the fact that the appellant was one of the persons entitled to an equal issue of shares as adverted to in the legislation, he simultaneously resumed membership of the ASX under the Constitution.
The ASX was obligated by express provisions of the Constitution, to make and promulgate new business rules concerning a variety of topics. These included the consequences of breach of any of its rules by a participating organisation or affiliate, including suspension and exclusion from the status of participating organisation or affiliate. It did enact the NBR, which also came into effect on 13 October 1998.
Clause 5A.1.1(6) of the NBR specifically stipulated that a person who was a natural person and a member of the ASX immediately prior to 13 October 1998 was deemed to be recognised as an affiliate by the ASX as at that date. By virtue of the definition of the word "member" in s 9 of the Corporations Law, the appellant was deemed, in any event, to be a member of the ASX as at 13 October 1998.
The significance of the lastmentioned situation is that s 772A of the Corporations Law provided that the NBR operated as a contract under seal between the appellant and the ASX, by which the appellant agreed to observe and perform the provisions of those rules, so far as they were applicable to him.
The NBR contained transitional provisions, to which I will come in due course.
The NBR stipulated that "there shall be" established a NAT, inter alia, for the purposes of hearing and determining disciplinary proceedings under those Rules.
The Constitution, as adopted on 13 October 1998, contained separate transitional provisions. I will also refer to these later, in detail.

The Status of the Appellant

The appellant rests his argument on the terms of clause 5A.1.6 of the NBR, which reads as follows:-
“An Affiliate may surrender his or her recognition as an Affiliate by giving notice in writing to the Exchange. The surrender shall not take effect until it is accepted by the Exchange. The Exchange shall not unreasonably refuse to accept a surrender.”
He contends, in effect, that, even if the NAT continued to have jurisdiction to hear and determine the charges against him after 13 October 1998, then his letter of surrender necessarily brought that process to an end in any event.
The appellant challenged the propriety of the finding by the learned trial judge that there were implied terms that the appellant agreed that he should not surrender his status as an affiliate whilst there were charges pending against him. He rejected the proposition that if he did purport to surrender his status whilst such charges were pending, the ASX was entitled to refuse to accept such surrender until the charges were heard and determined.
This contention proceeded upon the footing that, because the Corporations Law declared that the NBR had effect as a contract under seal between the appellant and the ASX, the normal principles of contract law as to implied terms were applicable. Thus, it was said, the reasoning of the learned trial judge could only be correct if it could fairly be said that the terms said to have been implied were either implied as a matter of law, or were to be implied to give business efficacy to the relevant contractual arrangements.
It was submitted on behalf of the appellant that neither head of implication had been established in the instant case.
Reference was made to the decision in Castlemaine Tooheys Ltd & Anor v Carlton & United Breweries Ltd & Anor (1987) 10 NSWLR 468 at 486-7, where Hope JA commented that terms may be implied in a contract in a number of ways.
One, he said, is commonly called implication by law, when terms may be implied regardless of the actual intention of the parties. Another is the implication of a term which is necessary, in the circumstances of a particular case, to give efficacy to the contract.
As he pointed out, the distinction between the two types of situation was referred to by Mason J (as he then was) in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 345-346 (“Codelfa”).

Hope JA said:-
“One basic distinction between these two classes of implied terms is this. Terms implied by the application of the business efficacy test are terms unique to the particular contract under consideration; they depend upon the express terms of that contract and the relevant surrounding circumstances. Terms implied by law, on the other hand, are, or at least are relevantly for these proceedings, terms which, prima facie, are to be implied in all contracts of a particular class. As I will seek to show, whether the implication is excluded requires regard to be had to the express terms of the contract and to the relevant surrounding circumstances of the case, but the prima facie implication depends upon the contract falling within the class in respect of which the law has decided that particular terms should be implied. Although the distinction between the two classes of implication has not been and perhaps is still not universally appreciated, classes of contract in respect of which terms will be implied by law, and the terms which will be implied, have in many cases been long established. Typical classes are contracts between master and servant, for the sale of goods, for the provision of work and materials and between landlord and tenant. However the classes of contracts in which the law will imply terms are not closed; the difficult question is to determine what test should be applied before the courts imply such a term for the first time.
What the test is, and whether there is more than one test, does not seem to be certain. Problems have arisen because of conflicting statements as to what matters are relevant, including whether the actual intention of the parties is a matter to be considered. The way in which most of the terms implied by law have arisen in the past and, I would think, can still arise is suggested in a footnote to par 354 at 229 of the treatment of contract in Halsbury’s Laws of England, 4th ed, vol 9. After referring to some confusion in references to intention, the learned author states:
‘Perhaps the truth is that the ambiguous terminology enables the courts in the first instance to imply terms on the basis of the intention of the parties ... but later there comes a time when the particular implied term has become so much a part of common practice that the courts begin to import it into all transactions of that type as a matter of course; and the result is a rule of law of the type considered in this paragraph.’ ”
It is trite to say that, if the business efficacy principle is to be invoked in a particular case, then this carries with it the need to satisfy the five pre-requisite conditions originally adverted to in B P Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20 at 26 and reiterated in Codelfa.
As I read the reasons published by the learned trial judge, he seems to have accepted that the deemed contract between the appellant and the ASX was of a generic type which fell within the first category referred to by Hope JA. He concluded, largely on the basis of the reasoning of the Full Court of Queensland in Robinson that it was implicit in the relationship between the parties that the appellant agreed to submit to the jurisdiction of the NAT under the Articles (and thereafter under the NBR) and abide by its findings. He accepted that this founded a right in the ASX to decline to permit an affiliate to surrender status pending the hearing and determination of any charges.
He also made reference to the reasoning in General Medical Council, although this arose from a statutory, rather than a contractual, context. It is, in my view, of limited assistance for present purposes, other than to reinforce the view that a construction which avoids the situation that a delinquent member can escape the consequences of improper conduct simply by surrendering status has prima facie attraction, if the expression of the relevant provisions will reasonably permit of that construction.
The learned trial judge derived particular support for his conclusion from the following dictum of Connolly J in Robinson at 647:-
“It is clear in my judgment that a person who is a member when the report which initiates the disciplinary machinery is received by the Institute has contracted that he will submit to progressive steps provided for by the article and that his subsequent resignation can have no effect upon that contractual submission”.
There are two points which need to be made concerning the decision in Robinson.
First, it proceeds on the premise that, once a disciplinary process has been initiated before a domestic tribunal pursuant to a contractual power arising from the constitution of a voluntary association, then the association is entitled to carry that process through to a conclusion. This is so notwithstanding that, during the pendency of the process, the relevant contract has come to an end and the parties are no longer in any relevant legal relationship with one another.
This is not a situation where some proprietary right or interest is said to have become vested in a party pursuant to a relevant contract. It seems a somewhat startling proposition that, absent a specific contractual provision entitling an association to proceed further against a party with whom it is no longer in any legal relationship, pending disciplinary proceedings may nevertheless be carried through to the extent of potentially imposing very substantial financial penal sanctions. This is particularly so where, as in Robinson, the termination of relationships effectively removed certain important penalties (such as potential termination or suspension of membership) which could have been imposed as portion of a range of options.
In Robinson no authority is given for such a proposition and, in part at least, the decision was the product of the specific provisions of the constitution in question.
I am by no means convinced that, at least in the context of this case, any term of indefinite submission implied by law can reasonably be asserted. It is also difficult to see how it can realistically be asserted that all pre-requisite conditions required by the business efficacy rule can be satisfied. Indeed Mr Wells QC, of senior counsel for the respondent, did not really set out to attempt to demonstrate such a situation.
Second, it seems from the report of Robinson that the former member had an absolute right of resignation, whereas, in the instant case, that is not the situation.
Quite clearly clause 5A.1.6 of the NBR confers on the ASX in these proceedings a right to refuse to accept a surrender of status, if it has a reasonable ground for so doing.
It follows that the resolution of this issue is not found in any implied term of a relevant contract. It is to be discerned from a proper application of clause 5A.1.6 of the NBR itself.
That provision specifically envisages the existence of circumstances in which it will be reasonable for the ASX to refuse to accept a proposed surrender. It also expressly provides, as a term of the deemed contract between the parties, that a proposed surrender does not take effect until accepted by the ASX.
The sole question which arises is, therefore, whether the ASX acted unreasonably in declining to accept the surrender until the disciplinary proceedings were completed.
In my opinion Mr Wells QC is undoubtedly correct when he contends that, in the circumstances of this case, the appellant bears the onus of demonstrating that the withholding of consent was unreasonable. (Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596.)
The concept of reasonableness essentially focuses attention on the logic, rationality and appropriateness of what is under contemplation and the relationship of it to the status of the ASX as conferred by the Articles and the NBR.
This is best illustrated by references to the authorities touching on the familiar clauses in leases which stipulate that consent to assignment shall not unreasonably be withheld.
Those authorities, inter alia, suggest that the expressions “unreasonably”, “wholly unreasonable” and “without reasonable cause” necessarily invoke consideration of whether or not a given stance is arbitrary or capricious. (See, for example, Mills v Cannon Brewery Co Ltd [1920] 2 Ch 38 at 45, J A McBeath Nominees Pty Ltd v Jenkins Development Corporation Pty Ltd [1992] 2 Qd R 121 and the authorities therein cited, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (supra), International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] Ch 513, Barrow v Isaacs & Son [1891] 1 QB 417 at 419, Houlder Bros & Co Ltd v Gibbs [1925] Ch 575.)
Applying the conceptual approach adopted in those authorities to the instant case, it may be said that a refusal to accept must be based on considerations going directly to the incidents of the relationships between the parties and the fair and legitimate enforcement of contractual rights and processes arising from them. It must not be based on collateral or extraneous considerations which render that refusal arbitrary and capricious.
It cannot, on any view, fairly be said that the decision of the ASX in this case was either arbitrary or capricious.
As the learned trial judge recognised, the attitude of the ASX fell to be considered in light of the important role which it discharges in the commercial fabric of society and the associated public interest considerations. It is a matter of considerable importance that serious breaches be investigated and, where appropriate, moneys from illicit and improper activities which have operated to the serious detriment of members of the public be recovered from the person responsible. Moreover, the proper discipline of affiliates who have been guilty of prohibited conduct is a vital plank in the integrity of the whole ASX operation - a consideration which is of paramount importance to a significant section of the community.
The learned trial judge was plainly correct in holding that the ASX did not unreasonably withhold acceptance of the purported surrender by the appellant of his status as an affiliate. Its decision arose from proper considerations, directly relevant to the proper incidents of that status.
That aspect of the appeal must therefore be decided against the appellant.

The Jurisdiction of the NAT

Both parties to the appeal embarked upon a lengthy analysis of the Corporations Law, the Articles, the Constitution, the OBR and the NBR in an attempt to demonstrate the validity of their respective contentions.
Whilst this was useful and informative, it seems to me that the core issue involved can be dealt with on a relatively simple basis.
Although it may remain a vexed question as to whether the NAT adverted to in par 14.2.1 of the NBR is, or can legally be, the same entity as the NAT erected under Article 55A of the Articles, the primary initial enquiry must surely be directed towards consideration of the combined effect of sub par (b) and sub par (f) of Article 25 of the Constitution.
Article 25, so far as relevant, provided:-
"25.1 This constitution must be read and construed in such manner that:
....
(b) .. every committee and tribunal constituted under the articles of association of the Company in force before the Transition Time continues to exist and to function subject to and shall be regarded as appointed under this constitution;
....
(f)..... unless a contrary intention appears, all persons things and circumstances appointed or created by or under the articles of association of the Company in force before the Transition Time shall continue to have the same status, operation and effect after the Transition Time.”
It must be conceded that these provisions are somewhat curiously expressed, but it seems to me that their import is clear enough.
First, it seems beyond question that the NAT, as existing prior to 13 October 1998, was continued in existence and function after that date “subject to and ... [as if] appointed under ... [the] constitution”. So much is apparent from the specific language of Article 25(1)(b). It is a reasonable assumption that, being so continued, it was intended to fulfil some practical function and purpose. An obvious likely purpose was the finalisation of such matters as may have been pending before it.
Second, despite its somewhat obscure mode of expression, the apparent intendment of Article 25(1)(f) was to ensure that certain situations existing as at 13 October 1998 should not be nullified by the change of status of the ASX but should continue thereafter. The vital question is the intended span of such situations.
I consider that the appropriate paraphrase of the relevant portions of Article 25(1)(f) is that all things and circumstances created by or under the Articles in force before 13 October 1998 are to “continue to have the same ... operation and effect after ... ” that date. That description is apt to encompass the pending disciplinary proceedings between the parties.
It is at once to be seen that, in part at least, the provisions of Article 25(1)(f) are intended to complement those in Article 25(1)(b).
With respect, I agree with the conclusion of the learned trial judge that these transitional provisions were clearly intended to preserve both the NAT and also any matters which were before it and undisposed of, at least to the extent necessary to complete such matters.
It is beyond belief that, in effecting the change of status, the ASX would have contemplated simply abandoning the matters currently on foot before the NAT as at 13 October 1998. One “function” which is continued by Article 25(1)(b) must, logically, be that of completing its unfinished business. That may well be the sole raison d’etre after 13 October 1998 in terms of Article 25(1)(b).
Furthermore, I think that there is a sound argument that the mode of expression found in Clause 14.2.1 of the NBR contemplates the erection of a completely new National Adjudicatory Tribunal as from 13 October 1998. If this be correct then the pre-existing NAT, continued in existence, would have had no work to do, absent a conclusion that pending proceedings were intended to be completed after the change of status of the ASX.
As a secondary argument Mr Wells QC drew attention to the definition of “Business Rules” contained in s 761 of the Corporations Law. This encompasses any rules, regulations or by-laws made by the ASX, or that are contained in its Constitution and that govern the activities or conduct of persons in relation to the stock market. As he pointed out, the definition focuses on the relevant subject matter, rather than the source of the prescriptions.
He next drew attention to the definitions clause of the NBR which, inter alia, stipulates that an expression employed in those rules has the same meaning as that attributed to it in the Corporations Law.
From that point he drew attention to the paragraphs 1 and 2 of the Transitional Provisions of the NBR. These are expressed as follows:-
“1.... Any act or thing done under or for the purposes of a provision of the Business Rules as in force prior to the Transition Time (‘Old Business Rules’) has effect from that date as if it had been done under or for the purposes of the corresponding provision of the Business Rules that come into force at the Transition Time (‘New Business Rules’).
2.Subject to Rule 1, the rescission of the Old Business Rules and the approval of the New Business Rules do not disturb the continuity of status, operation or effect of any act or thing done under or for the purposes of the Old Business Rules.”
Mr Wells QC submitted that the combined effect of these provisions is that the continuity of status, operation and effect of the charges and the processing of them under the Articles was thus preserved and maintained, “as if it had been done under or for the purposes of the corresponding provisions of the” NBR.
He further drew attention to the provisions of s 766D(1)(c) and s 766D(2)(d) of the Corporations Law, which render it clear that the change of status of the ASX does not render defective any legal proceedings.
Like the learned trial judge I have doubts as to whether disciplinary proceedings before the NAT can properly be categorised as “legal proceedings” within the intendment of the relevant statutory provisions. That expression is normally taken to comprehend a process which results in the determination of legal rights of parties in a manner enforceable at law (cf Alliance Petroleum Australia NL & Ors v The Australian Gas Light Company (1983) 34 SASR 215, Guilfoyle v Home Office [1981] 1 All ER 943.) It is not apt to describe the activities of a purely domestic tribunal.
Moreover, I am by no means sure that the ingenious argument based on the definition of “Business Rules” reflects the true intention and legal effect of the NBR.
However, it can at least be said that the concepts evidenced by the several provisions adverted to above strongly reinforces the primary conclusions which I have expressed.
In my opinion the somewhat simplistic argument of the appellant that the pending disciplinary proceedings came to an end on the adoption of the Constitution and NBR cannot withstand serious scrutiny. It studiously ignores the considerations to which I have referred.
I would reject both strands of argument pursued by the appellant and dismiss the appeal.
MULLIGHAN J: I agree that the appeal should be dismissed for the reasons given by Olsson J.
NYLAND J: I agree that the appeal should be dismissed for the reasons expressed by Olsson J.

[1999] SASC 284

16 July 1999